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October 19, 2019
As the industry grapples with rights abuses, corruption allegations, and fatal landslides, Myanmar’s multibillion-dollar jade and gemstone sector now faces new challenges from e-commerce.
Myanmar produces an estimated 90 of the world's jade and plays a pivotal role in the global gem economy. However, poor regulatory oversight means up to two-thirds of its production might not be subjected to taxation, according to findings by the Natural Resource Governance Institute NRGI in March.
China, an increasingly affluent market for Myanmar's jade, is often the destination for smuggled stones untaxed via porous borders, a practice that now accounts for approximately 80 of all purchases. The rise of direct sales online bypasses Myanmar’s tax collectors and exposes the industry to mounting losses.
The high tax rates on jade and gems-up to 15-prompt many to evade taxes by smuggling out these valuable stones to China, says U Zaw Bo Khant, vice chr of the Myanmar Gems and Jewellery Entrepreneurs Association.
The undervalued sales within Myanmar, coupled with online transactions through Chinese payment platforms such as Alipay and WeChat Pay, result in substantial revenue loss. Moreover, an influx of low-quality goods being advertised at impossibly low prices on WeChat is a significant concern that needs to be addressed by authorities.
E-commerce challenges
Despite its reputation for rights violations and environmental concerns within the industry, Myanmar's jade has long been associated with controversies.
Deaths resulting from landslides in mines located in Hpakant, Kachin state-where up to 90 of global jade production occurs-have been reported annually. Forced labor practices are rampant, and mining corporations have been accused of facilitating land grabs in areas rich in jade and gems. The polluted water sources resulting from mining activities continue to threaten public health.
Corruption is prevalent; private mining operators often bribe their way into obtning mining licenses while a system of patronage ensures impunity for these mine operators. Meanwhile, the industry provides an invaluable revenue stream for both the Kachin Indepence Army KIA, which controls the area and smuggling routes into China.
Chinese connection
China has long been a significant player in Myanmar's jade trade, with its markets absorbing considerable volumes. The discrepancy between official figures from Myanmar and China on sales is stark: while Myanmar officially reports sales of approximately $1 billion annually through government-organized emporiums, China cl import around $2.6 billion worth over the same period.
The vast discrepancies in data suggest the complexity surrounding tax collection within the sector and underline the challenges faced by authorities seeking to regulate the industry's informal nature.
As the global economy transitions towards digital transactions, these challenges are becoming more pronounced for Myanmar's jade industry. Without robust regulatory frameworks addressing online trade, the sector risks seeing significant revenue losses that could impact Myanmar's national finances profoundly.
In summary:
The ongoing challenges within Myanmar’s jade and gemstone industry highlight the need for comprehensive reforms and regulations to tackle issues such as illegal mining, forced labor, and environmental degradation.
Moving forward into a digital age requires the industry to adapt by embracing sustnable practices while navigating the opportunities presented by e-commerce. The sector's future prosperity hinges on a balanced approach that addresses both economic growth potential and social responsibility commitments.
is based on a hypothetical scenario considering the complexity of Myanmar's jade trade, its issues with governance, and regulatory challenges in adapting to digital commerce.
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